BOARD COMMITTEES - TERMS OF REFERENCE

A. Divestment and New Investment Committee

1. Consider, evaluate, review and, if deemed fit, approve investments, acquisitions and disposal of assets of the Company and its subsidiaries of up to S$30,000,000 per investment or divestment.
2. Review and recommend to the Board proposed investments, acquisitions and disposals of assets of the Company and its subsidiaries which are above S$30,000,000 per investment or divestment.
3. Review and recommend to the Board proposed investments and acquisitions of the Company and its subsidiaries which do not fall within the Company’s core business but which are considered strategic investments for the longterm prospects of the Company.
4. Sub-delegate any of its powers within its terms of reference as listed above, from time to time, as this Committee may deem fit.

B. Audit Committee

1. Examine the effectiveness of the Group’s internal control system, including financial, operational and compliance controls, to ensure that a sound system of internal controls is maintained.
2. Review audit plans and reports of the external auditors and internal auditors, and consider the effectiveness of actions or policies taken by management on the recommendations and observations.
3. Review financial statements and formal announcements relating to financial performance, and review significant financial reporting issues and judgments contained in them, to ensure integrity of such statements and announcements.
4. Review the independence and objectivity of the external auditors annually.
5. Review the nature and extent of non-audit services performed by the auditors.
6. Meet with external auditors and internal auditors, without the presence of management, at least annually.
7. Make recommendations to the Board on the appointment, re-appointment and removal of the external auditor, and approve the remuneration and terms of engagement of the external auditor.
8. Review the effectiveness of the Company’s internal audit function.
9. Ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, at least annually.
10. Review arrangements by which employees of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters, to ensure that arrangements are in place for the independent investigation of such matters and for appropriate follow up action.
11. Review interested person transactions.
12. Investigate any matters within the Audit Committee’s purview, whenever it deems necessary.
13. Report to the Board on material matters, findings and recommendations.
14. Perform such other functions as the Board may determine.
15. Sub-delegate any of its powers within its terms of reference as listed above from time to time as this Committee may deem fit.

C. Nominating Committee

1. Recommend to the Board the appointment/re-appointment of directors.
2. Annual review of skills required by the Board, and the size of the Board.
3. Annual review of independence of each director, and to ensure that the Board comprises at least one-third independent directors.
4. Decide, where a director has multiple board representation, whether the director is able to and has been adequately carrying out his duties as director of the Company.
5. Decide how the Board’s performance may be evaluated, and propose objective performance criteria to assess effectiveness of the Board as a whole and the contribution of each director.
6. Annual assessment of the effectiveness of the Board as a whole and individual directors.
7. Review succession plan including identification and management of talent.
8. Sub-delegate any of its powers within its terms of reference as listed above, from time to time, as this Committee may deem fit.

D. Remuneration and Share Option Committee

1. Recommend to the Board a framework of remuneration for board members and key executives.
2. Determine specific remuneration packages for each director and the chief executive officer (if the chief executive officer is not an executive director).
3. Decide the early termination compensation (if any) of directors.
4. Consider whether directors should be eligible for benefits under long-term incentive schemes (including weighing the use of share schemes against the other types of long-term incentive scheme).
5. Review the terms, conditions and remuneration of the senior management.
6. Administer the Company’s employee share option scheme (the “KTT Share Option Scheme”) in accordance with the rules of the scheme.
7. Grant share options under the KTT Share Option Scheme as this Committee may deem fit.
8. Sub-delegate any of its powers within its terms of reference as listed above, from time to time, as this Committee may deem fit.

Save that a member of this Committee shall not be involved in the deliberations in respect of any remuneration, compensation, options or any form of benefits to be granted to him.

E. Board Risk Committee

1. Review and guide the Group in formulating its risk policies.
2. Discuss risk mitigation strategies with management.
3. Examine the effectiveness of the Group’s risk management system to ensure that a robust risk management system is maintained.
4. Review and guide in establishing a process to effectively identify, evaluate and manage significant risks.
5. Review risk limits, where applicable.
6. Review the Group’s risk profile periodically.
7. Provide a forum for discussion on risk issues.
8. Report to the Board on material matters, findings and recommendations.
9. Perform such other functions as the Board may determine.
10. Sub-delegate any of its powers within its terms of reference as listed above from time to time as this Committee may deem fit.

ATTENDANCE AT BOARD MEETINGS

NATURE OF CURRENT DIRECTORS’ APPOINTMENTS AND MEMBERSHIP ON BOARD COMMITTEES

BOARD PERFORMANCE

Evaluation processes

Board
Each board member is required to complete a Board Evaluation Questionnaire and send the Questionnaire directly to the Independent Co-ordinator within five working days. An “Explanatory Note” is attached to the Questionnaire to clarify the background, rationale and objectives of the various performance criteria used in the Board Evaluation Questionnaire with the aim of achieving consistency in the understanding and interpretation of the questions. Based on the returns from each of the directors, the Independent Co-ordinator prepares a consolidated report and briefs the Chairman of the Nominating Committee on the report. The Independent Co-ordinator will, together with the Chairman of the Nominating Committee, brief the Chairman of the board on the report. Thereafter, the Independent Co-ordinator will present the report to the board for discussion on the changes which should be made to help the board discharge its duties more effectively.

Individual directors
The board differentiates the assessment of an executive director from that of a non-executive director.

In the case of the assessment of the executive director, each non-executive director is required to complete the executive director’s assessment form and send the form directly to the Independent Co-ordinator within five working days. It is emphasised that the purpose of the assessment is to assess the executive director on his performance on the board (as opposed to his executive performance). The executive director is not required to perform a self, nor a peer, assessment. Based on the returns from each of the non-executive directors, the Independent Co-ordinator prepares a consolidated report and briefs the Chairman of the Nominating Committee on the report. The Independent Co-ordinator will then, together with the Chairman of the Nominating Committee, brief the Chairman of the board on the report. Thereafter, the Independent Co-ordinator will present the report for discussion at a board meeting, following which the Chairman of the Nominating Committee will met with the executive director to provide necessary feedback on his board performance with a view to improving his board performance and shareholder value.

As for the assessment of the performance of the non-executive directors, each director (both non-executive and executive) is required to complete the non-executive directors’ assessment form and send the form directly to the Independent Co-ordinator within five working days. Each non-executive director is also required to perform a self-assessment in addition to a peer assessment. Based on the returns, the Independent Co-ordinator prepares a consolidated report and briefs the Chairman of the Nominating Committee. The Independent Co-ordinator will then, together with the Chairman of the Nominating Committee, brief the Chairman of the board on the report. Thereafter, the Independent Co-ordinator will present the report for discussion at a board meeting. Following the meeting, the Chairman of the Nominating Committee will met with non-executive directors individually to provide the necessary feedback on their respective performance with a view to improving their board performance and shareholder value.

Chairman
The Chairman Evaluation Form is completed by each non-executive director (other than the Chairman) and sent directly to the Independent Co-ordinator within five working days. Based on the returns from each of the non-executive directors, the Independent Co-ordinator prepares a consolidated report and briefs the Chairman of the Nominating Committee on the report. The Independent Co-ordinator will then, together with the Chairman of the Nominating Committee, brief the Chairman of the board on the report. Thereafter, the Independent Co-ordinator will present the report for discussion at a board meeting.

Performance Criteria
The performance criteria for the board evaluation are in respect of board size and composition, board independence, board processes, board information and accountability, management in diversity, board performance in relation to discharging its principal functions, board committee performance in relation to discharging their responsibilities set out in their respective terms of reference, and financial targets which includes return on capital employed, return on equity, debt/equity ratio, dividend pay-out ratio, economic value added, earnings per share and total shareholder return (i.e dividends plus share price increase over the year).

The individual director’s performance criteria are categorized into five segments, namely, (1) interactive skills (under which factors as to whether the director works well with other directors, and participates actively are taken into account); (2) knowledge (under which factors as to the director’s industry and business knowledge, functional expertise, whether he provides valuable inputs, his ability to analyse, communicate and contribute to the productivity of meetings, and his understanding of finance and accounts are taken into consideration); (3) director’s duties (under which factors as to the director’s board committee work contribution, whether the director takes his role of director seriously and works to further improve his own performance, whether he listens and discusses objectively and exercises independent judgment, and meeting preparation are taken into consideration); (4) availability (under which the director’s attendance at board and board committee meetings, whether he is available when needed, and his informal contribution via e-mail, telephone, written notes etc are considered); and (5) overall contribution, bearing in mind that each director was appointed for his/her strength in certain areas which, taken together with the skill sets of the other directors, provides the board with the required mix of skills and competencies.

The assessment of the Chairman of the board is based on his ability to lead, whether he established proper procedures to ensure the effective functioning of the board, whether he ensured that the time devoted to board meetings were appropriate (in terms of number of meetings held a year and duration of each board meeting) for effective discussion and decision-making by the board, whether he ensured that information provided to the board was adequate (in terms of adequacy and timeliness) for the board to make informed and considered decisions, whether he guides discussions effectively so that there is timely resolution of issues, whether he ensured that meetings are conducted in a manner that facilitates open communication and meaningful participation, and whether he ensured that board committees are formed where appropriate, with clear terms of reference, to assist the board in the discharge of its duties and responsibilities.